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Real-Time Card-Spending Data Shows Stunning Rebound Across US Economy

Courtesy of ZeroHedge View original post here.

While investor attention has rapidly turned back to Beijing where a local food market has been traced as the source of a burst in new coronavirus infections, what matters far more for the stock market – and the political narrative in the US – is the state of reopening of the US economy, at least until the Chinese outbreak becomes something more tangible and results in further shutdowns for the world’s 2nd biggest economy.

That’s why tomorrow’s retail sales data for May is especially relevant: will it show a continued rebound from the March collapse at a time when many US states were partially or fully reopening? Well, for those who don’t have the patience to wait until 830am tomorrow, here is a just as good alternative: according to aggregated BAC credit and debit card data, spending is running at a modest -6.4% yoy pace for the 7-day period ending June 6th

A more narrow measure of spending – retail sales ex-autos – is roughly flat on a yoy basis, surging 8.9% mom SA in May, and bringing the 3-month average into positive territory at 0.2%. But before breaking out the champagne, note that this measure excludes most services including travel which is still quite depressed although showing incremental gains.

For a more comprehensive picture, in its latest card spending report, BofA focuses on spending trends from reopening, with a particular eye on the regional data, and uses the data to score states by the degree of reopening to examine the relative differences in spending.

Predictably, spending in the states that are furthest along in the recovery continue to outperform the broader population. Georgia stands out with total card spending of + 5.0% yoy on a 3-day moving avg with restaurants at -15% yoy. In contrast, total card spending in NY is running at -11% yoy with restaurants at -44% yoy. There is also a sharp leveling off in spending at beauty salons in the most opened states at a nearly 80% recovery to pre-COVID-19 levels. The critical question going forward is whether spending can continue to improve once states fully reopen, and once government stimulus and benefit checks end at the end of July.

As it did last month, BofA also take a look at the data for the full month of May to compare to the Census Bureau. It found an 8.9% mom seasonally adjusted (SA) increase in retail sales ex-autos in May. Note that BofA data looked much stronger than the Census in April with a 6.8% mom drop in our data vs. Census at -17.2% mom SA. This suggests that the Census data is due for a bounce to “catch up” with the trend in real-time spending data (Census uses sampling and estimations) but it may take a few months to reconcile.

Part of the reason that BofA data have looked stronger is that it is only capturing card spending and not cash. Since the lockdowns made it challenging to use cash, more people may have shifted to card spending, particularly debit. In fact, debit card spending is up 13.5% mom SA or 2.5% yoy in May vs. credit card which is up 12.0% mom SA or -22.4% yoy.

Monthly data also show the bounce in spending in the categories that were hardest hit such as lodging and travel and the continued fundamental strength in housing-related spending.

A look at card spending by MSA shows that some places like Atlanta have now fully escaped the spending hole while others such as Seattle, San Francisco, Boston, NY and LA remain around -20% lower compared to a year ago.

As has been the case since the shutdown, online spending remains strong despite fading some of its recent gains.

Also, as was the case last month, spending by the lowest income cohorts has been strongest on the way up, including at restaurants, although this may abruptly collapse at the end of July when government handouts cease.

Finally, while spending on airlines remains abysmal, the rebound in lodging, restaurant and especially furniture stores is quite dramatic. Grocery stores have generally reverted back to last year’s levels, while spending at department stores remains around 40% lower.


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